Mitt Romney said Tuesday that cutting spending slows growth in the economy -- a rhetorical slip more akin to an argument a Democrat might make than a Republican.

Speaking in Shelby Township, MI, the former Massachusetts governor took a question about the Simpson-Bowles fiscal commission empaneled by President Obama to address the nation's deficit and debt issues. In his response, he said that addressing taxes and spending issues are essential.

"If you just cut, if all you're thinking about doing is cutting spending, as you cut spending you'll slow down the economy," he said in part of his response. "So you have to, at the same time, create pro-growth tax policies."

That sort of comment was sure to raise the eyebrows of fiscal conservatives in the GOP, who have long preached a message of fiscal restraint as a path to economic growth.

"It's hogwash. It confirms yet again that Romney is not a limited government conservative," said Andy Roth, the vice president for government affairs at the fiscally conservative Club for Growth. "The idea that balancing the budget would not help the economy is crazy. If we balanced the budget tomorrow on spending cuts alone, it would be fantastic for the economy."

[Snip]

***UPDATE*** Romney spokesman Ryan Williams commented on the comments: The governors point was that simply slashing the budget, with no affirmative pro-growth policies, is insufficient to get the economy turned around. However, he believes that budget cuts  especially in the context of President Obamas unprecedented spending explosion  are a step in the right direction. As he made clear in his economic plan, he believes that spending cuts that reduce the size of government and balance the budget are crucial to economic growth and job creation.

“If you just cut, if all you’re thinking about doing is cutting spending, as you cut spending you’ll slow down the economy,” he said in part of his response. “So you have to, at the same time, create pro-growth tax policies.”

I’m not defending Mittens, but the headline is a total distortion. We shouldn’t feed the animals, either.

SO I guess what really counts here is Romney’s definition of “pro-growth tax policies”.

Yes. If you don’t reduce tax penalties, tarriffs and lower rates, cutting spending will not sufficiently drive the economy in the direction we want...which is up, not sideways. The Japanese made that mistake, didn’t they?

Yes. If you dont reduce tax penalties, tarriffs and lower rates, cutting spending will not sufficiently drive the economy in the direction we want...which is up, not sideways. The Japanese made that mistake, didnt they?

What was noticebly lacking in his comments was slashing the size of goverment including regulations.

“The governors point was that simply slashing the budget, with no affirmative pro-growth policies”

Why is it that most corrections tend merely to repeat what was said, if not make it worse. That there is what people had a problem with: the idea that slashing the budget by itself is not pro-growth. PR types are vastly overpaid.

"Yes. If you dont reduce tax penalties, tarriffs and lower rates, cutting spending will not sufficiently drive the economy in the direction we want...which is up, not sideways. The Japanese made that mistake, didnt they?"

- What on earth are you talking about?...

"Japan slowly wakes up to doomsday debt risk"

"...The government borrows more than it raises in taxes, and its debt pile amounts to two years' worth of Japan's economic output, the highest debt-to-GDP ratio in the world.

It costs Japan half of the country's tax income just to service its debt. Each year, Japan's debt level increases by more than the combined gross domestic product of Greece and Portugal."

Japan’s economic problems, like ours, originated in huge asset “bubbles.” From 1985 to 1989, Japan’s stock market tripled. Land prices in major cities tripled by 1991. The crash was brutal. By year-end 1992, stocks had dropped 57 percent from 1989. Land prices fell in 1992 and proceeded steadily downward; they are now at early 1980s’ levels. Wealth shrank. Banks — having lent on the collateral of inflated land values — weakened. Some became insolvent. The economy sputtered. It grew about 1.5 percent annually in the 1990s, down from 4.4 percent in the 1980s.

Despite massive stimulus, rapid growth hasn’t resumed two decades later. Although the Japanese reacted slowly, they adopted the advice of economics textbooks. They raised spending, cut taxes and let budget deficits balloon. Gross government debt soared from 63 percent of the economy (gross domestic product) in 1991 to 101 percent of GDP by 1997. It’s now around 200 percent. The Bank of Japan (their Federal Reserve) cut interest rates, going to zero in 1999 — a policy that, with some slight interruptions, endures.

Not total, though misleading. Romney seems to be saying that thew government will still be taking money out of the economy via taxes while its cutting spenidng. Which is not to say that he’s ignorant of the relation between taxes and spending. That less spending removes the rationale for high taxation and puts downward pressure on rates. Only that he’s speaking to the lag between cuts and eventual growth. Because so long as the government continues to collect taxes which will not be pumped back into the economy through spending, however inefficiently, theoretically some capital will sit idly.

Romney underestimates the importance of spending beyond the tax yield, which comprises—what?—something verging on 10% of GDP. Cutting that would not leave idle tax revenue sitting around, and hence couldn’t negatively affect growth. He also seems all too willing to believe activity spurred by government spending constitutes something economically meaningful. But the MSM lives and dies by numbers, and whether the feds are digging up and filling in holes or inventing the internet, we pretend their spending is meaningful.

If hole digging numbers go down, people will say the economy’s slowing. They will blame the absence of the “multiplier effect” and “pump priming” of government spending. On that count, Romney’s point is taken. Though I can’t help but feel he’s wildly missing the mark. In what universe is it easier to slash spending than cut taxes? Why wouldn’t tax cuts follow spending cuts, once we’ve gotten over the spending cut hump? We’ve already had plenty of historic tax cuts. Spending cuts are the holy grail.

Mon Feb 20 2012 19:35:11 GMT-0800 (Pacific Standard Time) · 357 of 496
mlo to bossmechanic
“Since 2008 I have never seen a point-by-point factual repudiation of the core birther arguements.”
Oh please. It’s been so beat to death here on FR that most of the people trying to correct birther silliness have grown tired of it.

Mitt Romney said Tuesday that cutting spending slows growth in the economy -- a rhetorical slip more akin to an argument a Democrat might make than a Republican.

Mitt, you and your pacs have spent money like drunken sailors to buy you the office of the presidency. How is that working out for you??? Those coveted independents are not nearly as stupid as you make them out to be.

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